Glass–Steagall Act

http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

begin quote from wikipedia under heading "Glass-Steagall Act"

Glass–Steagall Act

From Wikipedia, the free encyclopedia

Jump to: navigation, search

This article is about the 1933 Act establishing the FDIC. For the 1932 Act by the same sponsors, see Glass–Steagall Act of 1932.

Glass–Steagall Act

Full title	Banking Act of 1933
Acronym	Glass–Steagall Act
Enacted by the	73rd United States Congress
Effective	June 16, 1933
Citations
Stat.	48 Stat. 162 (1933)
Codification
Legislative history
Introduced in the House of Representatives as H.R. 5661 by Rep. Henry B. Steagall (D-Ala.) on Committee consideration by: U.S. House Committee on Banking and Currency Signed into law by President Franklin Delano Roosevelt on June 16, 1933
Major amendments
American Homeownership and Economic Opportunity Act, Gramm–Leach–Bliley Act, Depository Institutions Deregulation and Monetary Control Act
Relevant Supreme Court cases
None

Wikisource has original text related to this article: Banking Act of 1933

The Banking Act of 1933 was a law that established the Federal Deposit Insurance Corporation (FDIC) in the United States and introduced banking reforms, some of which were designed to control speculation.^[1] It is most commonly known as the Glass–Steagall Act, after its legislative sponsors, Carter Glass and Henry B. Steagall.
Some provisions of the Act, such as Regulation Q, which allowed the Federal Reserve to regulate interest rates in savings accounts, were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999, by the Gramm–Leach–Bliley Act. ^[2][3]
The repeal of the Glass–Steagall Act of 1933 effectively removed the separation that previously existed between Wall Street investment banks and depository banks and has been blamed by some for exacerbating the damage caused by the collapse of the subprime mortgage market that led to the Financial crisis of 2007–2010. The potential to make enormous profits trading mortage-backed securities with artificially high ratings^[4] encouraged banks to take on otherwise intolerable risk in the form of bad loans. The ease with which people were obtaining home loans drove an artificial housing boom that exacerbated the inevitable return to earth.<sup>[5]

end quote. 

The Glass Steagle Act prevented another Great Depression from happening (along with other legislation) until it was repealed in sections between 1980 and 1999.</sup>